AfDB Supports ESKOM to construct and maintain transmission lines and power stations in South Africa

The Board of Directors of the African Development Bank (AfDB), through its private sector window, approved a senior corporate loan equivalent to USD 375 million in ZAR-equivalent and a corresponding A/B syndicated loan for up to USD 750 million to support the Capacity Expansion Program (CEP) of Eskom Holdings SOC Ltd of South Africa. Eskom is South Africa’s state-owned power utility and the country’s primary electricity supplier with over 90 years of operational experience.

The program will be rolled out over a 5-year rolling period (2015/16 – 2019/20), and will contribute to a comprehensive expansion of South Africa’s generation capacity and transmission network. Through the CEP, Eskom will maintain and rehabilitate nearly 8,000 MW of installed capacity, while adding 10,986 MW base load capacity, including a 1,332 MW renewable energy peaking station. The CEP will also expand Eskom’s transmission network by 9,756 km, thereby connecting Eskom’s new generation as well as the nearly 90 independent power producers under the Government of South Africa’s Renewable Energy Independent Power Producer (RE IPP) Program. Eskom’s expansion plan will not only address the country’s power shortages but also restore South Africa’s role as electricity exporter. The CEP aims to catalyze economic growth and job creation in South Africa and the wider region.

This corporate loan complements previous ones approved by the African Development Bank in support of developing Southern Africa’s energy sector. In 2008, a first corporate loan of USD 500 million was approved through the Bank’s private sector window. In 2009, through the public window, the Bank approved a second loan of EUR 1,860 million to finance the 4,800 MW Medupi Power Project. In 2011, a third and fourth loans were accordingly approved for USD 265 million, through the Bank’s public window, and for USD 100 million through the Bank’s Clean Technology Fund.

The newly approved loan is being financed through the Bank’s private sector window. Through this operation, the African Development Bank is also crowding in cross-border financing into the continent through a syndicated A/B loan with commercial banks.